Culture shift needed before transformation

As the digital wave captures the attention of industries across the board, there may well be an overriding focus on enabling technologies as key to a successful transformation. But while technology plays its part, the most important and most challenging aspect is likely to be people. That’s because, despite fears to the contrary, the whole point of ‘digital transformation’ is to make things better for people, both those working within organisations, and those who are customers.

That’s according to Westpac’s Karen Dallas, organisational psychologist and senior manager of the bank’s Agile Practice. “Digital transformation is about the ability to create responsiveness to change and enabling the business to respond to new opportunities rapidly; this is not a technology shift, it is a culture shift. It has to become a part of the company’s DNA,” she explained.

Digital transformation is, fundamentally, an initiative in strategic change. People don’t like change, so managing it carefully is essential to success, something to which anyone who has ever involved themselves in an enterprise software deployment will attest. If employees are not on board with newly introduced ways of doing things, the potential for failure looms large.

With widespread change, there are bound to be substantial impacts on employees, agreed Dallas. “There are a couple of dimensions. Firstly, staff members are also customers of digital transformation. Secondly, their work is likely to change as internal systems and processes are impacted, for example, with a move towards self-service channels, robotics and other future ways of working. The entire ecosystem changes too, as the move is made from traditional to digital channels.”

That necessitates understanding and support, particularly for the fears of redundancy or replacement ‘by the machines’ which historically stalk in the shadows of technologically-driven change. “A good deal of effort has to be put into making people more comfortable with the future, and aligning skills to different future ways of working is central to that.”

Dallas said these skills include empathising with the customer, creating opportunities for cross-functional teams to collaborate, and get fast feedback, developing better insights and responding quickly to customer needs.

She makes a powerful point. “When you’re digitising, it is always important to look at the flip side of the coin. Instead of fear, consider the opportunities that it brings. What does digitisation mean for customer engagement, what does it mean about how value can be added for customers, what does it mean for the competitiveness and sustainability of the business?”

The challenge, said Dallas, is to “Replace fear-based thinking with opportunity-based thinking, make space for exploration and innovation, make it OK to challenge the status quo, and remove fear of failure.”

That goes to the heart of the purpose of digital transformation: it is about doing business better for customers who have more choice than ever. And to achieve transformation, Dallas said, an absolute focus on people, internal and external, is necessary. “This is less about technology and technology investment than it is about people and culture. If transformation is about business agility and the ability to respond quickly, you have to start with a focus on internal culture and mindset.”

Included in that, she added, is an alignment of all aspects of an organisation: its leadership, strategy, structure and processes. “Culture is the glue that holds it together; unless everything within ecosystem is aligned, change won’t be sustainable and you won’t get the benefit. And culture is about engaging and empowering people to take the agenda forward.”

Again, with a strong customer-centric approach, Dallas said digital transformation depends on cultivating an internal culture of engaged people who are empowered to respond quickly, leverage their knowledge and apply their thinking to future products or customer problems.

Even as robotics and AI enter the workplace, Dallas’ point echoes the observation made by economist Leo Cherne, ‘Computers are incredibly fast, accurate and stupid; humans are incredibly slow, inaccurate and brilliant; together they are powerful beyond imagination.’

“You want to create an environment where leadership sets the intent and provides the tools, then moves aside to allow knowledge workers to determine the ‘how’. Digital transformation doesn’t mean a move to more technology. It means a move from ‘command and control’, to ‘empower and solve’,” Dallas concluded.